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1、120,105,90,75,60,Deutsche BankMarkets Research,RatingBuyNorth AmericaUnited States,CompanyMonsanto,Date8 January 2013Results,IndustrialsChemicals/Commodity,ReutersMON.N,BloombergMON UN,Exchange TickerNYSMON,Price at 8 Jan 2013(USD)Price target52-week range,98.50112.0098.50-69.89,R 13 EPS guidance ra
2、ised to$4.30-$4.40(vs$4.18-$4.32)Monsanto reported FQ1 EPS of$0.61 vs$0.23 a year ago and consensus of$0.37.A lower than expected tax rate added$0.03.The beat was driven by AgProductivity(AP)where gross profit of$372MM,up 107%YoY,was 2xconsensus as higher generic Roundup pricing enabled Monsanto to
3、raise itsbranded Roundup pricing.Seeds&Genomics gross profit of$1.025B,up 12%YoY,was modestly above consensus of$1.0B as strength in corn(+29%YoY),driven by LatAm and a strong start to the US season,offset weakness in,David Begleiter,CFAResearch Analyst(+1)212 250-Ramanan SivalingamAssociate Analyst
4、()212 250-Jermaine BrownResearch Associate(+1)212 250-3624jermaine-Price/price relative,soybeans(-32%)due to patent issues with Roundup Ready soybeans in Brazil.Monsanto raised 13 EPS guidance to$4.30-$4.40 up 16-19%(cons:$4.38)on,45301/10,7/10,1/11,7/11,1/12,7/12,higher AP gross profit($200-$300MM)
5、,partially offset by the removal of$200MM of gross profit($0.20-$0.25)owing to the Brazil soybean issue.,MonsantoS&P 500 INDEX(Rebased),Key Highlights1)MONs 13 US order books are tracking ahead of 12 and are supportive ofacreage targets for reduced-refuge corn(36-38MM vs 27MM in 12)and RR2Ysoybeans(
6、39-41MM vs 32MM in 12).2)LatAm corn seed results were robust,Performance(%)AbsoluteS&P 500 INDEX,1m8.62.8,3m7.50.1,12m27.114.0,in Q1 amid heightened trait penetration.3)While MON has removed$0.20-$0.25 of EPS from Brazil RR1 soybeans from 13 guidance,a resolution of thepatent issue,with the primary
7、goals being a successful INTACTA RR2 launch(100MM acre opportunity in South America)that maintains the integrity of thecollection system appears likely.4)With a record 18 phase advancements in13 across its integrated yield pipeline(vs 14 in 12 and 9 in 11),this yearsR Risks:grain prices,regulatory d
8、elays(see p.7)Our$112 PT reflects Monsanto trading at 22.4x 14E EPS,in-line with itscurrent year multiple.Risks:regulatory delays,lower grain prices.Forecasts And Ratios,Year End Aug 312Q EPSFY EPS(USD),2011A1.872.92,2012E2.28A3.70,2013E2.504.40,2014E5.00,Source:Deutsche Bank estimates,company data_
9、Deutsche Bank Securities Inc.Deutsche Bank does and seeks to do business with companies covered in its research reports.Thus,investors shouldbe aware that the firm may have a conflict of interest that could affect the objectivity of this report.Investors shouldconsider this report as only a single f
10、actor in making their investment decision.DISCLOSURES AND ANALYSTCERTIFICATIONS ARE LOCATED IN APPENDIX 1.MICA(P)072/04/2012.,.,-,-,8 January 2013Chemicals/CommodityMonsantoFigure 1:Detail of Q1 2013 results($millions),($millions),Q113,Q112,%chg,Sales,$2,939$2,439,21%,Driven by strong performance in
11、 LatAm and strong early 3 order books in the US.13Outlook:Continued strong order book builds momentum for strong FY13.Potl softness in,2Q13 and 3Q13 due to time shift benefit in 1QSeeds&Genomics,Corn Seed andTraits,$1,139,$895,27%,Driven by growth in US due to shipment growth and LatAm(esp Brazil).V
12、T Pro 2 recordedsecond highest vols in Brazil.13 Outlook:Genuity RR Family acreage to increase in 13 vs.,(27 MM acres in 12.).VT Pro 2 to reach 33%of total branded corn portfolio.Volume growthand trait upgrades in U.S.and Latin America continue to drive overall growth.,Cotton Seed andTraits,$185,$19
13、4,(5%),Soybean,$231,$242,(5%),Positive RR2Y trait mix in US.Outlook:RR2Y acreage to reach 39MM-41MM acres(+7-+13MM acres YoY).14 expected commercial launch of Intacta RR2 PRO in Brazil(6bu/acre,yield benefit equates to$80/ac value for customer).,VegetableAll Other Crops,$156$44,$157$46,(1%)(4%),Tota
14、l Seeds andGenomics,$1,755$1,534,14%,Total AgProductivitySeeds&Genomics,$1,184$220,$905$147,31%50%,Driven by improved S/D fundamentals and higher glyphosate prices.Q113 Gross Profit:Corn Seed&Traits:+29.2%(YoY),Soybean Seed&Traits:-31.8%(YoY),Cotton Seed&Traits:-5.9%(YoY),Vegetable:+2.5%(YoY).13 Out
15、look:Gross profit of,$7.65B.Operating expenses:4.08B,Ag Productivity,$270,$82,229%,Total EBITSeeds andGenomics,$49012.5%,$2299.6%,114%+300bps,SG&A:$542MM vs.($500MM in 1Q12).R&D:$346MM vs.($351MM in 1Q12)as a resultof investments in future growth opportunities.,AgriculturalProductivity,22.8%,9.1%+13
16、70bps,EBIT MarginInterest chargesTax,16.7%($28)($123),9.4%($35)($68),+730bps20%,Equity in Earningsof Affiliates,Net IncomeOne time items(after-tax)Reported NetIncome,$339$10$349,$126$8$134,169%,EPS Outlook:FY 13:$4.30-$4.40.(excludes$0.20-$0.25,Significant BalanceSheet Items,1Q13:FCF:$1.47B vs.(1Q12
17、:$0.85B)CFO:$1.56B vs.(1Q12:$1.11B),net cash frominvesting:-$96MM vs.(1Q12:-$254MM).13 Outlook:FCF:$1.8B-$2.0B CFO:$2.9B-$3.3B,net cash required for investing activities:$1.1B-$1.3B.Source:Deutsche Bank,Company Data,Page 2,Deutsche Bank Securities Inc.,8 January 2013Chemicals/CommodityMonsantoFigure
18、 2:EPS Guidance FY2010-FY2013$5.00,$4.50$4.00$3.50$3.00$2.50$2.00$1.50$1.00,$2.39,$2.96,$3.70,$4.30-$4.40,FY2010,FY2011,FY2012,FY2013E,Source:Monsanto,Figure 3:Brazil Corn:Trait penetration and mix,Figure 4:Argentina Corn:Trait penetration and mix,100%,90%,100%,95%,95%,95%,99%,100%,90%,90%,80%70%60%
19、50%40%30%20%10%0%,18%,47%,64%,77%,80%70%60%50%40%30%20%10%0%,2009,2010,2011,2012,2013F,2009,2010,2011,2012,2013F,VT PRO 2(DOUBLE STACK),1st and 2nd-GEN SINGLE TRAITS,Genuity VT Triple PRO,Singles and Doubles,Source:MonsantoDeutsche Bank Securities Inc.,Source:Monsanto,Page 3,0,8 January 2013Chemical
20、s/CommodityMonsanto,Figure 5:Brazil:Trait Value(avg trait net selling price peracre index),Figure 6:Argentina:Trait Value(avg trait net selling priceper acre index),21.81.61.4,1.2-1.3,1.7-1.8,1.41.21,1,1.2-1.3,1.210.80.60.40.20,1,0.80.60.40.2,Single,Dual-Mode Above Ground,Double Stack,SingleSource:M
21、onsantoFigure 7:2012 US Competitive Corn Yield Comparison12,1st-Gen Above Ground DoubleSource:Monsanto11.2,Genuity VT Triple Pro,108,6.8,8.2,7.1,8.4,7.8,8.4,8.3,9.6,8.8,9.9,9.3,9.7 9.7,10.3,8,10,6,5.7,6.4,6.3,420,2002,2003,2004,2005,2006,2007,2008,2009,2010,2011,2012,Source:MonsantoPage 4,Dekalb Ann
22、ual Yield Advantage,Dekalb Three-Year Rolling Yield Advantage,Deutsche Bank Securities Inc.,8 January 2013Chemicals/CommodityMonsantoFigure 8:into US corn seed market share gains45%,40%,40%,39%,38%,37%,35%,36%,36%,35%35%36%,36%,37%36%,35%30%25%20%,19%,33%32%30%24%,30%,32%,15%,12%,13%,14%,10%10%5%0%,
23、2001,2002,2003,2004,2005,2006,2007,2008,2009,2010,2011,2012,Monsanto(Dekalb&American Seeds,Inc.),DuPont(Pioneer&PROaccess),Source:Deutsche Bank,company dataFigure 9:A Record 18 Projects Advanced Phases Across Monsantos Integrated YieldPipeline in 2013,20181614,14,18,121086,7,10,6,11,9,420,2007,2008,
24、2009,2010,2011,2012,2013,Source:Monsanto,Deutsche Bank Securities Inc.,Page 5,D,D,8 January 2013Chemicals/CommodityMonsantoFigure 10:2013 Monsanto 2013 R&D Pipeline Advancements,BIOTECH PLATFORM AGRONOMIC TRAITS,BREEDING TRAITS,Herbicide-Tolerant WheatNext Generation Insect-Protected SoybeansNext Ge
25、neration Corn RootwormNext Generation Genuity BollgardInsect Protected-+Roundup Ready SugarcaneDicamba-and Glufosinate-Tolerant CottonNext Generation Above GroundInsect-Protected Corn,Phase 2Phase 1Phase 1Phase 1Phase 2Phase 4Phase 1,Gosss Wilt Resistance in CornRoot Knot Nematode Resistance in Cott
26、onAGRONOMIC SOLUTIONSNematicide Chemistry(corn,soy,cotton)BioDirect Technology:Glyphosate-,Phase 3Phase 4Phase 3Phase 1,Resistant Weed Control,Dicamba-and Glufosinate-Tolerant CornInsect Protected+Roundup Ready SugarcanePage 6,Phase 3Phase 2,BioDirect Technology:Insect ControlBioDirect Technology:Vi
27、rus ControlImproved Dicamba Formulation:SoyImproved Dicamba Formulation:CottonIntegrated Farm Systems,Phase 4Phase 4Deutsche Bank Securities Inc.,4,4,4,2,U.S.,4,1,2,4,3,3,2,3,8 January 2013Chemicals/CommodityMonsantoFigure 11:Monsantos R&D Pipeline,Project,Phase,Value,Country ofLaunch,AcreagePotenti
28、al Country ofLaunch,AdditionalGeographicOpportunity,Comment,SOYBEAN PIPELINE,Soymega SDA Omega-3Vistive Gold,$250MM$250MM,U.S.U.S.,1MM10MM-15MM,Next-Generation Insect-Protected Soybean Family,500MM,Brazil,40MM-60MM,Argentina,First-ever trait developed for Brazilian market.,Next-Generation Higher-Yie
29、lding Soybeans,$250MM-$500MM,35MM-45MM Brazil,Argentina,Part of the Monsanto-BASF yield and stressCanadaR&D collaboration.,Genuity Roundup Ready 2 Xtend,$250MM,U.S.,35MM-45MM Brazil,Argentina,Canada,Soybean Nematode ResistanceCORN PIPELINE,To be decided when project enters Phase II,Drought-Tolerant
30、Family,$250MM-$500MM,U.S.,45MM-55MM Brazil,Argentina Initial product targeted for US Western dry-land,region.Part of the Monsanto-BASF yield andstress R&D collaboration,Roundup Hybridization SystemBroad-Acre Higher-Yielding,500MM,N/MU.S.,N/M45MM-55MM Brazil,Argentina,Part of the Monsanto-BASF yield
31、and stress,R&D collaboration.,Corn Rootworm IIIYieldGard Corn Borer IIIDicamba-,Glufosinate-,and Glyphosate-Tolerant CornDeutsche Bank Securities Inc.,$500MM$250MM-$500MM$250MM-$500MM,U.S.U.S.U.S.,30MM-40MM Brazil,Argentina45MM-55MM Brazil,Argentina45MM-55MM Brazil,ArgentinaPage 7,2,1,8 January 2013
32、Chemicals/CommodityMonsanto,Nitrogen-Utilization Family,$250MM-$500MM,U.S.,45MM-55MM Brazil,Argentina,Potential to reduce nitrogen costs or improve,yields.Field tests have shown yields maintainedat lower nitrogen applications and yieldimprovements with normal nitrogen application.Part of the Monsant
33、o-BASF R&D,FOPs-Tolerant CornSource:MonsantoPage 8,To be decided when project enters Phase IIDeutsche Bank Securities Inc.,4,3,2,2,4,3,1,1,1,2,1,2,8 January 2013Chemicals/CommodityMonsantoFigure 12:Monsantos R&D Pipeline(continued),Project,Phase,Value,Country ofLaunch,AcreagePotential Country ofLaun
34、ch,AdditionalGeographicOpportunity,Comment,COTTON,CANOLA,SUGARCANE and WHEATPIPELINE,Dicamba-and Glufosinate-Tolerant Cotton,$250MM,U.S.,8MM-11MM,India,Australia,Brazil,Genuity Bollgard,$250MM,U.S.,8M-11M,India,Australia,Brazil,Drought-Tolerant Cotton Family,$250MM,U.S.,8M-11M,India,Australia,Brazil
35、,Cotton LygusControl,$250MM,U.S.,2M-4M,India,Australia,Brazil,Roundup Ready2 CanolaHigher-Yielding CanolaDicamba Toletant Candola,$250MM$250MMTo be decided whenproject enters Phase II,CanadaCanadaDicambaToletant,5M-10M5M-10M,U.S.,AustraliaU.S.,AustraliaTo be decided Dicamba Tolerant Candolawhen proj
36、ect,Dicamba Toletant Candola,Candola,enters Phase IITo be decided when project enters Phase II,Herbicide-Tolerant Wheat,$250MM,U.S.,8M-10M,Broad-Acre Higher-Yielding Wheat Family,To be decided when project enters Phase II Yield-and-Stress Wheat and Herbicide-TolerantWheat.Part of the Monsanto-BASF y
37、ield andstress R&D collaboration.,Insect-Protected+Roundup Ready Sugarcane,$250MM,Brazil,10M-12M,US,India,1 Part of the Monsanto-Solae Collaboration2 Part of the Monsanto-BASF Yield and Stress R&D Collaboration.3 Part of the Monsanto-BASF R&D Collaboration,Deutsche Bank Securities Inc.,Page 9,8 Janu
38、ary 2013Chemicals/CommodityMonsantoSource:Monsanto,Page 10,Deutsche Bank Securities Inc.,8 January 2013Chemicals/CommodityMonsantoFigure 13:Corn stocks-to-use ratios are at the lowest levels since the mid-1970sSource:Deutsche Bank,USDA,Figure 14:Global Corn Yields by Country/Region(bu/acre;2011),Fig
39、ure 15:Global Corn Acreage by Region(millions ofacres;2011),160,147,145,100,92,140120100806040,129,126,119,98,84,78,68,37,90807060504030,70,32,27,25,200,2010,10,9.5,6.5,4.5,3,0,Source:Global Insights,USDADeutsche Bank Securities Inc.,Source:Global Insights,USDA,Page 11,8 January 2013Chemicals/Commod
40、ityMonsanto,Figure 16:Global Corn Consumption(MM tons)MM Tons,Figure 17:Arable Land Per CapitaAcres/Capita,1200,1090,1.2,1000800,970,10.8,1.02,0.75,600,600,0.6,0.55,400,220,410,0.4,0.44,0.41,2000,0.2,1965,1980,2000,2020E,2030E,0,1961,1980,2000,2020E,2030E,Source:Global Insights,Source:Global Insight
41、s,ValuationOur$112 price target is based on Monsanto trading at 22.4x 2013 EPS in 12 months,in-line with its current multiple of 22.4x(12E EPS).We believe this valuation iswarranted by the Monsantos defensive earnings growth characteristics as well as ourforecast of 11.3%in 2013E and 11.3%in 2013E,a
42、nd the close correlation we havefound(R275%)between chemical sector valuations and ROIC.RisksKey downside risks include regulatory delays on approvals for new biotech seedproducts,lower farm incomes which could result in farmers spending less on premiumseeds and traits,and increased regulatory barri
43、ers to genetically modified crops.,Page 12,Deutsche Bank Securities Inc.,8 January 2013Chemicals/CommodityMonsantoFigure 18:Monsanto Annual Income Statement,2010-2014E($in millions,except per-share data),2010,2011,2012,2013E,2014E,Net Sales%ChangeCost of GoodsGross ProfitGross M argin%ChangeSelling,
44、General&AdministrativeSG&A/Sales%ChangeResearch&DevelopmentR&D/Sales%Change(SG&A+R&D)/SalesOperating ProfitOperating M argin%ChangeInterest Expense%ChangeInterest Income,10,502(10%)(5,310)5,19249.4%(24%)(2,064)19.7%(0%)(1,205)11.5%8%31.1%1,92318.3%(47%)(162)26%56,11,79612%(5,744)6,05251.3%17%(2,190)
45、18.6%6%(1,387)11.8%15%30.3%2,47521.0%29%(162)0%75,13,51615%(6,471)7,04552.1%16%(2,346)17.4%7%(1,517)11.2%9%28.6%3,18223.5%29%(191)18%77,15,15812%(7,431)7,72751.0%10%(2,550)16.8%9%(1,530)10.1%1%26.9%3,64724.1%15%(205)7%80,16,0256%(7,540)8,48556.0%10%(2,750)16.8%8%(1,625)10.1%6%28.9%4,11025.6%13%(205)
46、0%75,Solutia Related-Expenses,Other Income(Expense)Pretax IncomePretax M argin%ChangeTaxesTax RateM inority InterestsNet IncomeNet M argin%ChangeBasic Shares Outstanding%ChangeDiluted Shares Outstanding%ChangeBasic EPS%ChangeDiluted EPS%Change,(6)1,81117.2%(48%)(470)26.0%(12)1,32912.7%(46%)544(0.5%)
47、549(1.0%)$2.44(46%)$2.42(45%),(40)2,34819.9%30%(712)30.3%(52)1,58413.4%19%537(1.3%)542(1.3%)$2.9521%$2.9221%,(46)3,02222.4%29%(974)32.2%(48)2,00014.8%26%534(0.4%)540(0.4%)$3.7427%$3.7027%,(55)3,46722.9%15%(1,040)30.0%(52)2,37515.7%19%5350.1%540(0.0%)$4.4419%$4.4019%,(55)3,92524.5%13%(1,178)30.0%(58)
48、2,69016.8%13%532(0.5%)538(0.5%)$5.0614%$5.0014%,Source:Deutsche Bank,Company Data,Deutsche Bank Securities Inc.,Page 13,8 January 2013Chemicals/CommodityMonsantoFigure 19:Monsanto Quarterly Income Statement,2012-2013E($in millions,except per-share data),2012,2013E,Q1,Q2,Q3,Q4,YEAR,Q1A,Q2,Q3,Q4,YEAR,
49、Net Sales%ChangeCost of GoodsGross ProfitGross M argin%ChangeSelling,General&AdministrativeSG&A/Sales%ChangeResearch&DevelopmentR&D/Sales%Change(SG&A+R&D)/SalesOperating ProfitOperating M argin%ChangeInterest Expense%ChangeInterest IncomeOther Income(Expense)Pretax IncomePretax M argin%ChangeTaxesTa
50、x RateNoncontrolling InterestsNet IncomeNet M argin%ChangeBasic Shares Outstanding%ChangeDiluted Shares Outstanding%ChangeBasic EPS%ChangeDiluted EPS%Change,2,43933%(1,343)1,09644.9%34%(500)20.5%11%(351)14.4%16%34.9%24510.0%277%(53)23%18(6)2048.4%716%(70)34.3%(8)1265.2%1045%535(1%)541(1%)$0.241052%$
